Wells Fargo emerged as the apparent victor in the battle for control of Wachovia bank on Thursday night, after rival suitor Citigroup broke off talks with Wells Fargo and federal regulators but vowed to have its day in court.
While Citigroup said it plans to seek US$60 billion in damages for breach of contract, it has decided not to challenge the Wells Fargo-Wachovia deal in court.
Wells Fargo said late on Thursday it had ended talks with Citigroup and was moving ahead to acquire all of Wachovia’s banking and other operations.
It said the deal would not require aid from the Federal Deposit Insurance Corp or any other government agency.
“We’re pleased Citigroup has abandoned its efforts to interfere with Wachovia’s planned merger with Wells Fargo,” said Wachovia spokeswoman Christy Phillips-Brown in an e-mail.
“We look forward to completing our merger with Wells Fargo, which we have always believed is in the best interest of shareholders, employees, creditors and retirees as well as the American taxpayers, and it imposes no risk to the FDIC fund,” she said.
FOURTH QUARTER FINISH
Wells Fargo said it expects the deal to be completed by the end of the fourth quarter. In a statement issued by the company, Wells Fargo chairman Dick Kovacevich called the deal “an incredible fit.”
In a brief statement, the Federal Reserve said that it would “immediately” begin consideration of the request by Wells Fargo to acquire Wachovia.
Citigroup backed out of negotiations with Fed officials and Wells Fargo on Thursday, ending a nearly weeklong battle for Wachovia Corp after the two banks failed to come to a resolution over how to split up the Charlotte, North Carolina-based bank.
While Citigroup decided not to ask that the Wells Fargo deal with Wachovia be prohibited, Citigroup said it remains willing to complete its original deal with Wachovia.
New York-based Citigroup said it believes it has strong legal claims against Wachovia, Wells Fargo and their officers and directors for breach of contract and plans to pursue its claims “vigorously.”
CITIGROUP’S CASE
Citigroup came to the rescue of an ailing Wachovia when it agreed last Monday to buy Wachovia’s banking operations for US$2.1 billion in a deal brokered by the Federal Deposit Insurance Corp.
Four days later, Wells Fargo stunned Citigroup by announcing that Wachovia’s board had agreed to an US$11.7 billion all-stock offer. Originally, the deal was valued at US$15.1 billion, or US$7 a share, but Wells Fargo stock has declined since it was announced.
Under Citigroup’s deal with Wachovia, the bank planned to assume US$53 billion worth of debt and agreed to absorb up to US$42 billion of losses from Wachovia’s US$312 billion loan portfolio.
The FDIC agreed to cover any remaining losses in exchange for US$12 billion in Citigroup preferred stock and warrants.
Wells Fargo, on the other hand, said it expected to take a US$74 billion hit on Wachovia’s US$498 billion loan portfolio. The bank said it expects to incur the majority of credit costs in the next two years, and for the transaction to add meaningfully to earnings after that.
Wells Fargo plans to issue up to US$20 billion of stock, primarily common stock, to maintain a strong capital position.
The combined company will have total deposits of US$787 billion and more than 10,500 locations — more than any other bank in the US.
In terms of total assets, a combined Wells Fargo-Wachovia would have US$1.42 trillion in assets.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
BULLY TACTICS: Beijing has continued its incursions into Taiwan’s airspace even as Xi Jinping talked about Taiwan being part of the Chinese family and nation China should stop its coercion of Taiwan and respect mainstream public opinion in Taiwan about sovereignty if its expression of goodwill is genuine, the Ministry of Foreign Affairs (MOFA) said yesterday. Ministry spokesman Jeff Liu (劉永健) made the comment in response to media queries about a meeting between former president Ma Ying-jeou (馬英九) and Chinese President Xi Jinping (習近平) the previous day. Ma voiced support for the so-called “1992 consensus,” while Xi said that although the two sides of the Taiwan Strait have “different systems,” this does not change the fact that they are “part of the same country,” and that “external
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source